What Is Going On With Grab Stock?

0:00 what is going on with grab Holdings it's been a while since I did an update video on the company so here it is because we do have some news we need to discuss in the last 6 months this stock did perform quite well up 40% now in the last couple of days especially in the last 3 days this stock has gone up in one day 11 12% and then at the time of making this video the stock is down 10.6% back under $5 now at $457 has a market cap of 18 $ 39 billion now you might say oh look at the forp super expensive 148.5 times yes that's true but this company is just turning a profit plus if we look at the expected number for fiscal 2026 you are trading

0:46 closer to 41 times that PE if you look at Price earnings to growth based on that Year's EPS you're at a PEG ratio of 33 which is not expensive at all so yeah just looking at a forward PE and making a conclusion in my opinion is really not the right way to invest especially not in these types of companies of course if you look at the likes of call it Apple Coca-Cola stuff like that okay I could understand but a company like grab looking at the PE right now just doesn't make any sense at the time of making this video the average analyst price Target sits 22% higher than the price we at today at $558 so let's talk a little bit about the company the recent news and why

1:33 investing in a company that is in Southeast Asia could make a lot of sense I'll show you a couple of numbers GDP wise growth rates population and all of that throughout the video so if you're interested in that stick around hit all the buttons would really appreciate that if you want to support me even further do check out the link down in the description and in the pink comment with the top 10 best stocks to buy now or go to f.com investor thank you very much all right so first a quick overview of the company and the EXP Ed growth rates we've seen what's expected with regards to revenue growth but what about free cash flow well first of all free cash flow is already positive it's expected to basically explode year-over-year in fiscal 2024 then grow another 24.8% in fiscal 25 than 10.8% in fiscal 2026 but

2:19 by then there are not that many analysts covering these companies and well and providing their assumptions if we look at the business segments there are three Financial Services one which of course is growing the fastest but that's the well the smallest one at the moment it's also the one that is unprofitable at the moment then we've got Mobility Revenue that has grown at a compound annual growth rate of 24.8% and then deliveries that's the largest chunk here the orange bars here that has grown at a compound annual growth rate of 18.6% since the March quarter in 2023 and here you can see Mobility is their most profitable part of the business business then we've got deliveries and well Financial Services is tracking to

3:04 become positive Break Even let's call it if you miss last quarter's earnings report this is basically it you've got the operating metrics on top then the financial measures at the bottom on demand gmv up 15% year-over-year or 18 on a constant currency basis group MTU MTU is monthly transacting users is now closer to 42 million that's up 16% year-over-year on demand m that's also in the millions of users that's increased 19% year over year if you look at revenue revenue increased 177% or 20% on a constant currency basis operating loss did improve 59% year-over-year they did say the following third quarter 2024 was a strong quarter for us as investment made across the business

3:50 drove an acceleration of our ond demand gmv growth we are serving more users than ever before with 42 monthly transacting users on the platform we remain bullish on the long-term growth Outlook of Southeast Asia and are firing on all cylinders to capture the strong user demand Trends improve income opportunities for ecosystem partners and drive Tech leet Innovation to enhance the efficiency of our Marketplace we delivered our 11th consecutive quarter of adjusted eida Improvement and our second positive profit for the quarter and the highest quarterly adjusted free cash flow to date for the business which you can see right here with the strong momentum we are seeing across the business heading into the end of the year we expect to deliver sequential on demand gmv growth in the fourth quarter

4:36 and are raising our full year 2024 group revenue and group adjusted eida Outlook which you can see right here 2024 Revenue to grow 17 to 18% which was previously only 14 to 17% growth year-over-year group adjusted eida 308 to 33 million Which is higher than the previous expected number of $250 to $270 million and then adjusted free cash flow remains unchanged they expect it to be positive for the full year now why was the stock up 11% couple of days ago well this thing came out grab ways takeover of rival go to at $7 billion valuation southeast Asia red haing firm push for deal once more because apparently in 2024 there were already some rumors that

5:22 grab wants to acquire that company so grab Holdings is weighing a takeover of rival go-to group at a valuation of more than $7 billion accelerating talks for a combination to end years of losses of Southeast Asia's competitive internet Market one scenario being discussed is an all stock purchase valuing shares of Indonesia's goto at more than 100 rupia a piece according to people familiar with this situation that would represent a premium of about 20% over its current stock price level now why does it make sense well if you look at the stock price for Goto since they went public it's down over 77% now why did the stock go back down on Wednesday well apparently go to

6:08 denies merger talks with grab for the second time so the Indonesian Tech Giant go to goek tokopedia by the way toop at that part I believe the majority has been sold to Tik Tok shop they still own a little bit but I believe Tik Tok shop took the majority of that if I'm not mistaken correct me if I'm wrong in the comment section below yes they also do e-commerce which is why it does make sense for that to merge there are some synergies in the financial space in the delivery mobility and all of that there are some synergies for sure and then you can enter the e-commerce space as well and really become that giant in Southeast Asia it makes sense it makes sense and probably that's one of the reasons why the stock went up so much so anyways go to has dismissed rumors of a

6:55 potential merger with Singapore base grab Holdings the speculation which has surface repeatedly in recent years remains unfounded the company clarified on Wednesday there is no agreement between the company and any party including grab to engage in emergent transaction as reported in the media now again if you look at the stock price if another company comes in puts in an offer and offers you to buy the company at a 20% premium I mean it does it does put some pressure on management especially since well the employees probably have shares and and well after this performance horrible performance it does put some pressure on maybe forcing them to sell the company maybe that's why the news got leaked who knows I mean

7:40 there are various reasons why these things get leaked probably to put some pressure on well management the board and saying look maybe it's time to sell but right now apparently that's not going to happen but usually when there is smoke there is fire and since this is not the first time that we're hearing about these rumors I mean if you wanted to buy grab before and you said oh it's above $5 already maybe I missed the boat well maybe right now might be your second or third chance we've also had a JP Morgan note come out they downgraded to neutral from overweight they maintained the price target of $560 which of course is a dollar higher than where we at right now the key rational here is that stock was up 52%

8:26 it's written here year to date but it's basically for a whole of 2024 pricing in strong earnings growth byy side expectations has risen conservative fiscal year 25 guidance could weigh on sentiment m&a speculation has fueled optimism but synergies may not materialize well apparently that's not going to happen so that doesn't make sense the stock reaction stock was up 133% stock is now down over 10% so all of those gains are gone so again this here doesn't make any sense right now valuation concern 2020 5 EV Abida of 34 times seen as relatively expensive again now with the stock being down 10% it's a bit less than that plus I mean they say all of these things but they still

9:12 maintain the price target of $560 which again is a dollar higher than where we're at right now the analy sentiment here is still bullish on long-term Market leadership and earnings growth waiting for better entry points before turning more constructive I guess the drop on Wednesday is a better entry point than the pop on Tuesday so there you have it now switching to a more macro view right it's a big player in Southeast Asia so let's look at GDP GDP for all of these countries combined so brune Cambodia Indonesia Vietnam Thailand Singapore etc etc in 2024 just short of $4 trillion and that's expected to be what at $5.5 trillion by 2029 so

9:58 quite a rapid growth and of course if you are a big player there if you want to create that super app you are expected to grow with that so huge opportunity there I believe there are around 700 million people living in Southeast Asia so yeah the the market is quite big looking at a couple of countries looking at real GDP growth rate versus previous periods there are here where we're looking at Indonesia Malaysia Philippines Singapore Thailand and Vietnam three of them have SE seen a quarter over quarter Decline and then the three others have seen an acceleration quarter over quarter but as you can see overall they're growing quite rapidly I mean Singapore in 2023 barely grew 1.1% but it does seem like

10:45 2024 is a year where they're growing much quicker than that and of course grab being a player in most of those markets this is definitely something you need to follow especially if you want to open a position this is all part of your thesis last thing here ratios of working age to total population from 1950 to 2,100 now as you can see again countries in Southeast Asia as you can see we are now in a period 2020 all the way to 2040 where the participation is probably going to Peak in all of those countries some countries have already peaked some others will peek a bit later so yeah you have to you have to think about that for sure but then again in the future

11:30 there's going to be quite a lot of Automation and all of that so remains to be seen what happens but yeah it's it's a population it's a geographic that is expected to grow quite quickly and if you can invest in a company that is creating that super app right food deliveries maybe even e-commerce Mobility financial services and all of that I think picking the winner or the best player should put you in a very very good position this is a company worth $18 something billion dollar at the moment a market that are playing in 700 million people of course the average revenue per user is not as big as if you were a big player in the United States or in Europe right because they make less money but still I think this

12:16 company as I've said in previous videos I think this company could be a hundred billion do in the future the future is not 20 26 or 27 the long-term future I I think that's definitely possible and so looking at the stock right now if we go all the way back to 2022 we can see the the stock started to make higher lows and then at the end of well towards the end of 2024 the stock went from $3 all the way to $5 close to $6 does seem like this was a period where the stock was overbought and then we retraced under the 50 and the 20-day moving average let's see let's see what happens we tried to go over that but of course that didn't hold because of those merger talks that weren't true were true weren't true we'll see in a couple of weeks and months if if anything happens

13:04 the 200 day moving average sits closer to $4 at $4 and11 it's an interesting it's an interesting one I currently do not have a position very very close to buy very very close to buying it because well I've been following the company for for a while I've used it actually 10 years ago in Thailand so I've known about it for a long long time didn't know it was public but yeah it's an interesting pick it's an interesting pick for sure and if I'll buy it you'll probably know it in the portfolio video that I release on every Sunday so all in all that's about it let me know what you think about this company and this stock in the comment section Below have you bought it sold traded let me know down in the comment section below like subscribe all love that and I see you all in the next one bye-bye

13:50 [Music] [Music]